Mar 31, 2018
Company Overview, Basis of Preparation & Significant Accounting Policies
1. Corporate Information
Star Paper Mills Limited (''the company'') is a public limited company in India having its plant at Saharanpur in the State of Uttar Pradesh and registered office at Duncan House, 2nd Floor, 31, Netaji Shubash Road, Kolkata in the State of West Bengal and engaged in the manufacture and supply of Paper and Paper Board as its core business. It produces a wide range of Industrial Packaging and cultural paper catering to all segment of the consumer. The Company''s shares are listed on the National Stock Exchange Limited and the BSE Limited.
2. Statement of Compliance and Recent Pronouncements
2.1 Statement of Compliance
The Company has adopted Indian Accounting Standards (referred to as "Ind AS") notified under the Companies (Indian Accounting Standards) Rules, 2016 (as amended) read with Section 133 of the Companies Act, 2013 ("the Act") with effect from April 1, 2017 and therefore Ind ASs issued, notified and made effective have been considered for the purpose of preparation of these financial statements.
These are the Company''s first Ind AS Standalone Financial Statements and the date of transition to Ind AS as required has been considered to be April 1, 2016.
The financial statement up to the year ended March 31, 2017, were prepared under the historical cost convention on accrual basis in accordance with the Generally Accepted Accounting Principles and Accounting Standards as prescribed under the provisions of the Companies Act, 2013 read with the Companies (Accounts) Rules, 2014 then applicable (Previous GAAP) to the Company. Previous period figures in the Financial Statements have been recast/restated to make it comparable with with current year figures.
In accordance with Ind AS 101-"First Time adoption of Indian Accounting Standards" (Ind AS 101), the Company has presented a reconciliation of Shareholders'' equity as given earlier under Previous GAAP and those considered in these accounts as per Ind AS as at March 31, 2017, and April 1, 2016 and also the Net Profit as per Previous GAAP and that arrived including Other Comprehensive Income under Ind AS for the year ended March 31, 2017. The mandatory exceptions and optional exemptions availed by the Company on First-time adoption have been detailed in the financial statement.
2.2 Recent Pronouncements
On March 28, 2018, Ministry of Corporate Affairs ("MCA") has issued the Companies (Indian Accounting Standards) Amendment Rules, 2018 notifying Ind AS 115, Revenue from Contract with Customers" and Appendix B to Ind AS 21 "Foreign currency transactions and advance consideration" which are applicable with effect from financial periods beginning on or after April 1, 2018.
3. Significant Accounting Policies
3.1 Basis of Preparation
The Financial Statements have been prepared under the historical cost convention excepting certain financial instruments that are measured in terms of relevant Ind AS at fair values/ amortized costs at the end of each reporting period and certain class of Property, Plant and Equipment i.e freehold land which on the date of transition have been fair valued to be considered as deemed costs.
Historical cost convention is generally based on the fair value of the consideration given in exchange for goods and services.
As the operating cycle cannot be identified in normal course, the same has been assumed to have duration of 1 2 months. All Assets and Liabilities have been classified as current or non-current as per the operating cycle and other criteria set out in Ind AS 1 ''Presentation of Financial Statements'' and Schedule III to the Companies Act, 2013.
The Financial Statements are presented in Indian Rupees and all values are rounded off to the nearest two decimal lakhs except otherwise stated.
Fair Value Measurement
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date under current market conditions.
3.2 Property Plant and Equipment (PPE)
Property, plant and equipment are stated at cost of acquisition as deemed cost on the date of transition except the fair value of the freehold land on the date of transition considered as deemed cost and subsequent improvements thereto less accumulated depreciation and impairment losses, if any. Cost of an asset comprises its purchase price or its construction cost including import duties and non-refundable purchase taxes, inward freight, dismantling costs, installation expenses wherever applicable and any cost directly attributable to bring the asset into the location and condition necessary for it to be capable of operating in the manner intended by the management, after deducting trade discounts and rebates and recoverable taxes. For major projects, interest and other costs incurred on / related to direct borrowings to finance projects / fixed assets during construction period and related pre-operative expenses, if appropriate, are capitalized.
Parts of an item of PPE having different useful lives and material value and subsequent expenditure on Property, Plant and Equipment arising on account of capital improvement or other factors are accounted for as separate components.
The cost of replacing part of an item of property, plant and equipment is recognised in the carrying amount of the item if it is probable that the future economic benefits embodied within the part will flow to the Company and its cost can be measured reliably. The costs of the day-to-day servicing of property, plant and equipment are recognised in the income statement when incurred.
Capital Work-in-progress includes preoperative and development expenses, equipments to be installed, construction and erection materials, etc. Such properties are classified to the appropriate categories of PPE when completed and ready for intended use.
Depreciation and Amortization of Expenses
Depreciation on PPE is provided on the basis of life reviewed at the year end which is the same as per Schedule II of the Companies Act, 2013. The depreciation on PPE other than plant and machinery is provided on written down value method and on Plant and Machinery on straight-line method. Certain Plant and Equipment''s have been considered Continuous Process Plant on the basis of technical assessment.
Depreciation methods, useful lives and residual values and are reviewed, and adjusted as appropriate, at each reporting date.
3.3 Derecognition of Tangible assets
An item of PPE is de-recognised upon disposal or when no future economic benefits are expected to arise from its use. The gain or loss arising on the disposal or retirement of an item of PPE is determined as the difference between the sales proceeds/estimated net realisable value and the carrying amount of the asset and is recognised in the Statement of Profit and Loss
3.4 Leases
Leases are classified as finance leases whenever the terms of the lease transfer substantially all the risks and rewards incidental to the ownership of an asset to the Company. All other leases are classified as operating leases.
Finance leases are capitalized at the inception of the lease at lower of its fair value and the present value of the minimum lease payments and a liability is recognised for an equivalent amount.
Payments made under operating leases are recognised as expenses on a straight-line basis over the term of the lease unless the lease arrangements are structured to increase in line with expected general inflation or another systematic basis which is more representative of the time pattern of the benefits availed Contingent rentals, if any, arising under operating leases are recognised as an expense in the period in which they are incurred.
3.5 Impairment of Tangible Assets
Tangible assets are reviewed at each balance sheet date for impairment. In case events and circumstances indicate any impairment, recoverable amount of assets is determined. An impairment loss is recognized in the statement of profit and loss, whenever the carrying amount of assets either belonging to Cash Generating Unit (CGU) or otherwise exceeds recoverable amount. The recoverable amount is the higher of assets'' fair value less cost to disposal and its value in use. In assessing value in use, the estimated future cash flows from the use of the assets are discounted to their present value at appropriate rate.
3.6 Financial assets and financial liabilities
Financial assets and financial liabilities (financial instruments) are recognised when the Company becomes a party to the contractual provisions of the instruments.
Financial assets and financial liabilities are initially measured at fair value. Transaction costs that are directly attributable to the acquisition or issue of financial assets and financial liabilities (other than financial assets and financial liabilities at fair value through profit or loss) are added to or deducted from the fair value of the financial assets or financial liabilities, as appropriate, on initial recognition. Transaction costs directly attributable to the acquisition of financial assets or financial liabilities at fair value through profit or loss are recognised immediately in the Statement of Profit and Loss.
The financial assets and financial liabilities are classified as current if they are expected to be realized or settled within operating cycle of the company or otherwise these are classified as non-current.
The classification of financial instruments whether to be measured at Amortized Cost, at Fair Value Through Profit and Loss (FVTPL) or at Fair Value Through Other Comprehensive Income (FVTOCI) depends on the objective and contractual terms to which they relate. Classification of financial instruments are determined on initial recognition.
(i) Cash and cash equivalents
All highly liquid financial instruments, which are readily convertible into determinable amounts of cash and which are subject to an insignificant risk of change in value and are having original maturities of three months or less from the date of purchase, are considered as cash equivalents. Cash and cash equivalents includes balances with banks which are unrestricted for withdrawal and usage.
(ii) Financial Assets and Financial Liabilities measured at amortized cost
Financial Assets held within a business whose objective is to hold these assets in order to collect contractual cash flows and the contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding are measured at amortized cost using effective interest rate.
The above Financial Assets and Financial Liabilities subsequent to initial recognition are measured at amortized cost using Effective Interest Rate (EIR) method.
The effective interest rate is the rate that exactly discounts estimated future cash payments or receipts (including all fees and points paid or received, transaction costs and other premiums or discounts) through the expected life of the Financial Asset or Financial Liability to the gross carrying amount of the financial asset or to the amortised cost of financial liability, or, where appropriate, a shorter period, to the net carrying amount on initial recognition.
(iii) Financial Asset at Fair Value through Other Comprehensive Income (FVTOCI)
Financial assets are measured at fair value through other comprehensive income if these financial assets are held within a business whose objective is achieved by both collecting contractual cash flows and selling financial assets and the contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding. Subsequent to initial recognition, they are measured at fair value and changes therein are recognised directly in other comprehensive income.
The Company has made an irrevocable decision to consider equity instruments not held for trading to be recognized at FVTOCI.
(iv) For the purpose of para (ii) and (iii) above, principal is the fair value of the financial asset at initial recognition and interest consists of consideration for the time value of money and associated credit risk.
(v) Financial Assets or Liabilities at Fair value through profit or loss
Financial Instruments which does not meet the criteria of amortised cost or fair value through other comprehensive income are classified as Fair Value through Profit or loss. These are recognised at fair value and changes therein are recognized in the statement of profit and loss.
(vi) Impairment of financial assets
A financial asset is assessed for impairment at each reporting date. A financial asset is considered to be impaired if objective evidence indicates that one or more events have had a negative effect on the estimated future cash flows of that asset.
However, for trade receivables or contract assets that result in relation to revenue from contracts with customers, the company measures the loss allowance at an amount equal to lifetime expected credit losses.
(vii) De-recognition of financial instruments
The Company de-recognizes a financial asset or a group of financial assets when the contractual rights to the cash flows from the asset expire, or when it transfers the financial asset and substantially all the risks and rewards of ownership of the asset to another party and also transfer qualifies for derecognition under Ind-AS - 109.
On de-recognition of a financial asset (except for equity instruments designated as FVTOCI), the difference between the asset''s carrying amount and the sum of the consideration received and receivable are recognized in statement of profit and loss.
On de-recognition of assets measured at FVTOCI the cumulative gain or loss previously recognised in other comprehensive income is reclassified from equity to profit or loss as a reclassification adjustment.
Financial liabilities are de-recognized if the Company''s obligations specified in the contract expire or are discharged or cancelled. The difference between the carrying amount of the financial liability de-recognized and the consideration paid and payable is recognized in Statement of Profit and Loss.
(viii) Valuation of Investments
The Company holds investments in equity which are measured at fair value through Other Comprehensive Income. The Company''s investments in mutual fund schemes have been valued at fair value and are recognised in Profit and Loss Account.
3.7 Biological Assets Biological Assets
Biological assets of the company comprises of unharvested clonal plants that are classified as current biological assets. The company recognizes biological assets when, and only when, the company controls the assets and the benefits associated with such asset flow to the company and the fair value or cost of the biological assets could be measured. Biological assets are measured on initial recognition and at the end of each reporting period at its fair value less costs to sell. The gain or loss arising from a change in fair value less costs to sell of biological assets are included in statement of profit and loss for the period in which it arises.
On transition to Ind AS the company has recognised biological assets for the first time as required by Ind AS 101 at fair value less cost to sell as at April 1, 201 6 (transition date).
3.8 Inventories
The materials and other supplies held for use in the production of inventories are not written down below cost if the related finished products are expected to be sold at or above cost. Except for this the Inventories are valued at lower of cost or net realisable value. However, Cost of inventories other than raw material is ascertained on ''weighted average'' basis. The value of raw materials is determined by first in first out method.
Cost in respect of raw materials and stores and spares includes expenses incidental to procurement of the same. Cost in respect of finished goods and wrapper represents material, labour and other manufacturing cost and appropriate portion of overheads but does not include interest, selling and distribution overheads.
Cost in respect of process stock represents, cost incurred up to the stage of completion.
3.9 Asset Held for Sale
Non-current assets or disposal groups comprising of assets and liabilities are classified as ''held for sale'' when all of the following criteria''s are met: (i) decision has been made to sell, (ii) the assets are available for immediate sale in its present condition, (iii) the assets are being actively marketed and (iv) sale has been agreed or is expected to be concluded within 1 2 months of the Balance Sheet date.
Subsequently, such non-current assets and disposal groups classified as held for sale are measured at the lower of its carrying value and fair value less costs to sell. Non-current assets held for sale are not depreciated or amortized
3.10 Foreign Currency Transactions
Transactions in foreign currencies are translated into the functional currency at the exchange rates prevailing on the date of the transactions. Foreign currency monetary assets and liabilities at the year-end are translated at the year-end exchange rates and the corresponding gain or loss is adjusted to the value of the concerned asset or liability. The company enters into derivative financial instruments to manage its exposure to foreign exchange rate risk using forward exchange contracts. Derivatives are initially recognised at fair value at the date a derivative contract is entered into and are subsequently re-measured to their fair value at each balance sheet date. The method of recognizing the resulting gain or loss depends on whether the derivative is designated as a hedging instrument, and if so, on the nature of the item being hedged.
3.11 Equity Share Capital
An equity instrument is a contract that evidences residual interest in the assets of the company after deducting all of its liabilities. Par value of the equity shares is recorded as share capital and the amount received in excess of par value is classified as Securities Premium.
Costs directly attributable to the issue of ordinary shares are recognised as a deduction from equity, net of any tax effects.
3.12 Provisions, Contingent Liabilities and Contingent Assets
Provisions involving substantial degree of estimation in measurement are recognized when there is a legal or constructive obligation as a result of past events and it is probable that there will be an outflow of resources and a reliable estimate can be made of the amount of obligation. Provisions are not recognised for future operating losses. The amount recognized as a provision is the best estimate of the consideration required to settle the present obligation at the end of the reporting period, taking into account the risks and uncertainties surrounding the obligation.
Contingent liabilities are not recognized and are disclosed by way of notes to the financial statements when there is a possible obligation arising from past events, the existence of which will be confirmed only by the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the Company or when there is a present obligation that arises from past events where it is either not probable that an outflow of resources will be required to settle the same or a reliable estimate of the amount in this respect cannot be made.
Contingent assets are not recognised but disclosed in the Financial Statements by way of notes to accounts when an inflow of economic benefits is probable.
3.13 Employee Benefits
Employee benefits are accrued in the year in which services are rendered by the employees. Short term employee benefits are recognized as an expense in the statement of profit and loss for the year in which the related service is rendered.
Contribution to defined contribution plans such as Provident Fund etc, is being made in accordance with statute and are recognised as and when incurred.
Contribution to defined benefit plans consisting of contribution to gratuity and Pension are determined at close of the year at present value of the amount payable using actuarial valuation techniques. Actuarial gain and losses arising from experience adjustments and changes in actuarial assumptions are recognized in other comprehensive income.
Other long term employee benefits consisting of Leave Encashment are determined at close of the year at present value of the amount payable using actuarial valuation techniques. The changes in the amount payable including actuarial gain/loss are recognised in the Statement of profit and loss.
3.14 Revenue Sale of goods
Revenue is recognized at the fair value of consideration received or receivable when the significant risk and rewards of goods and ownership of goods have been transferred and the amount thereof can be measured reliably. This represents the net invoice value of goods supplied after deducting discounts, rebates and taxes and duties collected on behalf of third parties and is inclusive of excise and other duties which the company pays as principal.
Interest, Dividend and Claims
Dividend income is recognized when the right to receive payment is established. Interest has been accounted using effective interest rate method. Insurance claims/ other claims are accounted as and when admitted / settled.
Export Benefits
Export benefits are accounted for as and when the ultimate realisability of such benefits are established.
3.15 Borrowing Costs
Borrowing cost comprises of interest and other costs incurred in connection with the borrowing of the funds. All borrowing costs are recognized in the Statement of Profit and Loss using the effective interest method except to the extent attributable to qualifying Property Plant Equipment (PPE) which are capitalized to the cost of the related assets. A qualifying PPE is an asset, that necessarily takes a substantial period of time to get ready for its intended use or sale. Borrowing cost also includes exchange differences to the extent considered as an adjustment to the borrowing costs.
3.16 Research and Development Expenditure
Research and development cost (other than cost of fixed assets acquired) are charged as an expense in the Statement of profit and loss in the year in which they are incurred.
3.17 Taxes on Income
Income tax expense representing the sum of current tax expenses and the net charge of the deferred taxes is recognized in the income statement except to the extent that it relates to items recognized directly in equity or other comprehensive income.
Current income tax is provided on the taxable income and recognized at the amount expected to be paid to or recovered from the tax authorities, using the tax rates and tax laws that have been enacted or substantively enacted by the end of the reporting period.
Deferred tax is recognized on temporary differences between the carrying amounts of assets and liabilities in the Financial Statements and the corresponding tax bases used in the computation of taxable profit. Deferred tax liabilities are generally recognized for all taxable temporary differences. Deferred tax assets are generally recognized for all deductible temporary differences to the extent that it is probable that taxable profits will be available against which those deductible temporary differences can be utilized.
Deferred tax liabilities and assets are measured at the tax rates that are expected to apply in the period in which the liability is settled or the asset realized, based on tax rates (and tax laws) that have been enacted or substantively enacted by the end of the reporting period.
Deferred tax assets include Minimum Alternative Tax (MAT) paid in accordance with the tax laws in India, which is likely to give future economic benefits in the form of availability of set off against future income tax liability and it is probable that the future economic benefit associated with asset will be realized.
The carrying amount of deferred tax assets is reviewed at the end of each reporting period and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the deferred tax asset to be utilized.
3.18 Earnings Per Share
Basic earnings per share are computed by dividing the net profit attributable to the equity holders of the company by the weighted average number of equity shares outstanding during the period. Diluted earnings per share is computed by dividing the net profit attributable to the equity holders of the company by the weighted average number of equity shares considered for deriving basic earnings per share and also the weighted average number of equity shares that could have been issued upon conversion of all dilutive potential equity shares.
3.19 Segment Reporting
Operating Segments are identified and reported taking into account the different risk and return, organisation structure and internal reporting system.
4. Critical accounting judgments, assumptions and key sources of estimation and uncertainty
The preparation of the financial statements in conformity with the measurement principle of Ind AS requires management to make estimates, judgments and assumptions affect the application of accounting policies and the reported amounts of assets and liabilities, the disclosures of contingent assets and liabilities at the date of the financial statements and reported amounts of revenues and expenses during the period. Accounting estimates could change from period to period. Actual results could differ from those estimates. Appropriate changes in estimates are made as management becomes aware of changes in circumstances surrounding the estimates. Differences between the actual results and estimates are recognized in the year in which the results are known/materialized and, if material, their effects are disclosed in the notes to the financial statements.
Application of accounting policies that require significant areas of estimation, uncertainty and critical judgments and the use of assumptions in the financial statements have been disclosed below. The key assumptions concerning the future and other key sources of estimation uncertainty at the balance sheet date, that have a significant risk of causing a material adjustment to the carrying amount of assets and liabilities within the next financial year are discussed below:
4.1 Arrangement containing leases and classification of leases
The Company enters into service/hiring arrangements for various assets/services. The determination of lease and classification of the service/hiring arrangement as a finance lease or operating lease is based on an assessment of several factors, including, but not limited to, transfer of ownership of leased asset at end of lease term, lessee''s option to purchase and estimated certainty of exercise of such option, proportion of lease term to the asset''s economic life, proportion of present value of minimum lease payments to fair value of leased asset and extent of specialized nature of the leased asset.
4.2 Fair value as Deemed cost for PPE
The Company has used fair value of land as carried out by external valuer as on the date of transition i.e. 1st April 201 6 as deemed costs. Such fair valuations involves higher degree of uncertainty and subjectivity.
4.3 Impairment loss on trade receivables
The Company evaluates whether there is any objective evidence that trade receivables are impaired and determines the amount of impairment allowance as a result of the inability of the customers to make required payments. The Company bases the estimates on the ageing of the trade receivables balance, credit-worthiness of the trade receivables and historical write-off experience. If the financial conditions of the trade receivable were to deteriorate, actual write-offs would be higher than estimated.
4.4 Income taxes
Significant judgment is required in determination of taxability of certain income and deducibility of certain expenses during the estimation of the provision for income taxes. The deferred tax liability (wihout considering indexation Benefit ) consequent to fair valuation of land and financial instruments involving estimation for timing differences has been recognised in these financial statements.
4.5 Provisions and Contingencies
Provisions and liabilities are recognized in the period when it becomes probable that there will be a future outflow of funds resulting from past operations or events and the amount of cash outflow can be reliably estimated. The timing of recognition and quantification of the liability requires the application of judgment to existing facts and circumstances, which can be subject to change.
4.6 Defined benefit obligation (DBO)
Critical estimate of the DBO involves a number of critical underlying assumptions such as standard rates of inflation, mortality, discount rate, anticipation of future salary increases etc. as estimated by Independent Actuary appointed for this purpose by the Management. Variation in these assumptions may significantly impact the DBO amount and the annual defined benefit expenses.
Mar 31, 2015
(a) Basis of preparation of Financial Statements
The financial statements have been prepared under the historical cost
convention in accordance with the provisions of the Companies Act, 2013
and accounting standards as prescribed under section 133 of the
Companies Act , 2013 , read with rule 7 of the Companies (Accounts)
Rules,2014 and other recognized accounting practices. Accounting
policies unless specifically stated to be otherwise, are consistent and
are in consonance with generally accepted accounting principles.
(b) Use of Estimates
The preparation of financial statements require the management to make
estimates and assumption that effect the reported amount of assets and
liabilities and disclosures relating to contingent liabilities and
assets as at the balance sheet date and the reported amounts of income
and expenses during the year. Difference between the actual results and
the estimates are recognised in the year in which the results become
known/materialise.Contingencies are recorded when it is probable that a
liability will be incurred and the amounts can reasonably be estimated.
Differences between the actual results and estimates are recognized in
the year in which the results are known/ materialized.
(c) Fixed Assets Tangible Assets
i) Fixed assets are stated at cost of acquisition/construction. Cost
includes borrowing cost and pre-operative expenses as allocated to the
fixed assets.
ii) Capital Work-in-progress includes Marchinery to be installed,
Construction and Erection Materials etc.
d) Depreciation
i) Depreciation has been provided for as per Schedule II of the
Companies Act, 2013, on written down value method and in respect of
plant and Marchinery acquired on or after 1.4.76, on straight-line
method. Certain plants have been considered as continuous process
plants on technical evaluation.
ii) Marchinery Spares which can be used only in connection with an item
of fixed asset and whose use is expected to be irregular are amortised
over the useful life of the respective fixed assets and the amount
amortised is included under stores and spares consumed.
(e) Impairment of Fixed Assets
Fixed Assets are reviewed at each balance sheet date for impairment. In
case events and circumstances indicate any impairment, recoverable
amount of fixed assets is determined. An impairment loss is recognised,
whenever the carrying amounts of assets exceeds recoverable amount. The
recoverable amount is the greater of assets net selling price or its
value in use. In assessing the value in use, the estimated future cash
flows from the use of assets are discounted to their present value at
appropriate rate. An impairment loss is reversed if there has been
change in the recoverable amount and such loss either no longer exists
or has decreased. Impairment loss/reversal thereof is adjusted to the
carrying value of the respective assets.
(f) Investments
Long-term investments are stated at cost less provisions, if any, for
diminution in the values thereof, other than temporary.
(g) Inventories
i) Inventories are valued at cost or estimated net realisable value
whichever is lower. The value of inventories other than raw materials
is determined on weighted average basis. The value of raw materials is
determined by first in first out method. Cost of raw materials includes
expenses incurred for procuring the same. Cost in respect of finished
goods, stock in process and wrapper represents manufacturing cost and
does not include interest, selling and distribution and certain
administrative overheads.
ii) Customs duty on materials in bond and excise duty on finished goods
lying in the factory as at the year-end is considered as cost for
valuation of stocks.
(h) Revenues and Other Income
i) Revenue is being recognised on accrual basis.
ii) All expenses, claims, interest on overdue debts/demands and other
incomes to the extent ascertainable and considered payable or
receivable as the case may be, have been accounted for.iii)Sales are
recognised on passing of the property in the goods as per the terms of
the sales, irrespective of actual delivery. Sales include excise duty
and incidental charges but rebates, discounts and Sales Tax/Value Add
Tax (VAT) are excluded there from.
(i) Foreign currency transactions
Transactions in foreign currencies are accounted for at the exchange
rate prevailing on the date of the transaction. Foreign currency
monetary assets and liabilities at the year end are translated using
closing exchange rates. The loss or gain thereon and also on the
exchange differences on settlement of foreign currency transactions
during the year are recognised as income or expenses and are adjusted
to the profit and loss account under respective heads of accounts.
Exchange differences arising with respect to forward contracts other
than those entered into, to hedge foreign currency risk on unexecuted
firm commitments or of highly probable forecast transactions are
recognized in the year in which they arise and the difference between
the forwards rate and exchange rate at the date of transaction is
recognized as income / expense over the life of the contract.
Keeping in view the announcement of Institute of Chartered Accountants
of India dated March 29, 2008 regarding accounting for derivatives,
mark to market losses on all other derivatives contracts (other than
forward contracts dealt as above) outstanding as at the year end , are
recognized in the accounts.
(j) Employee benefits
Employee benefits are accrued in the year services are rendered by the
employees.Short term employee benefits are recognised as an expense in
the statement of profit and loss for the year in which the related
service is rendered.
Contribution to defined contribution schemes such as Provident Fund
etc. are recognized as and when incurred.
Long term employee benefits under defined benefit scheme such as
contribution to gratuity, leave etc. are determined at close of the
year at present value of the amount payable using actuarial valuation
techniques.
Actuarial gains and losses are recognised in the year when they arise.
(k) Research & Development
Research and development cost (other than cost of fixed assets
acquired) are charged as an expense in the year in which they are
incurred.
(l) Income taxes
Provision for tax is made for both current and deferred taxes. Current
tax is provided on the taxable income using the applicable tax rates
and tax laws. Deferred tax assets and liabilities arising on account
of timing differences, which are capable of reversal in subsequent
years are recognised using tax rates and tax laws, which have been
enacted or substantively enacted. Deferred tax assets other than in
respect of carried forward losses or unabsorbed depreciation are
recognised only to the extent that there is a reasonable certainty that
sufficient future taxable income will be available against which such
deferred tax assets will be realized. In case of carry forward of
unabsorbed depreciation and tax losses, deferred tax assets are
recognized only if there is "virtual certainty" that such deferred tax
assets can be realized against future taxable profits.
(m) Borrowing Cost
Borrowing costs, that are attributable to the acquisition or
construction of qualifying asset, are capitalised as part of the cost
of such assets. A qualifying asset is one that necessarily takes
substantial period of time to get ready for use.All other borrowing
costs are charged to revenue.
(n) Provision, Contingent Liabilities and Contingent Assets
Provisions involving substantial degree of estimation in measurement
are recognised when there is a present obligation as a result of past
events and it is probable that there will be an outflow of resources.
Contingent liabilities are disclosed by way of notes to accounts.
Contingent assets are neither recognised nor disclosed in the financial
statements.
Mar 31, 2014
(a) Basis of preparation of Financial Statement
The accounts have been prepared under the historical cost convention
and in accordance with the provisions of the Companies Act,1956 and
Accounting Standards notified vide Companies (Accounting Standards)
Rules,2006.Accounting policies unless specifically stated to be
otherwise, are consistent and in consonance with generally accepted
accounting principles.
(b) Use of Estimates
The preparation of financial statements requires the management to make
estimates and assumption that effect the reported amount of assets and
liabilities and disclosures relating to contingent liabilities and
assets as at the balance sheet date and the reported amounts of income
and expenses during the year. Difference between the actual results and
the estimates are recognised in the year in which the results become
known/materialise.
(c) Fixed Assets
i) Fixed assets are stated at cost of acquisition/construction. Cost
includes borrowing cost and pre-operative expenses as allocated to the
fixed assets.
ii) Capital Work in progress includes Machinery to be installed,
Construction and Erection Materials etc.
d) Depreciation
i) Depreciation has been provided for as per Schedule XIV of the
Companies Act, 1956, on written down value method and in respect of
plant and Machinery acquired on or after 1.4.76, on straight-line
method. Certain plants have been considered as continuous process
plants on technical evaluation.
ii) Machinery Spares which can be used only in connection with an item
of fixed asset and whose use is expected to be irregular are amortised
over the useful life of the respective fixed assets and the amount
amortised is included under stores and spares consumed.
(e) Impairment of Fixed Assets
Fixed Assets are reviewed at each balance sheet date for impairment. In
case events and circumstances indicate any impairment, recoverable
amount of fixed assets is determined. An impairment loss is recognised,
whenever the carrying amounts of assets exceeds recoverable amount. The
recoverable amount is the greater of assets net selling price or its
value in use. In assessing the value in use, the estimated future cash
flows from the use of assets are discounted to their present value at
appropriate rate. An impairment loss is reversed if there has been
change in the recoverable amount and such loss either no longer exists
or has decreased. Impairment loss/reversal thereof is adjusted to the
carrying value of the respective assets.
(f) Investments
Long-term investments are stated at cost less provisions, if any, for
diminution in the values thereof, other than temporary.
(g) Inventories
i) Inventories are valued at cost or estimated net realisable value
whichever is lower. The value of inventories other than raw materials
is determined on weighted average basis. The value of raw materials is
determined by first in first out method. Cost of raw materials includes
expenses incurred for procuring the same. Cost in respect of finished
goods, stock in process and wrapper represents manufacturing cost and
does not include interest, selling and distribution and certain
administrative overheads.
ii) Customs duty on materials in bond and excise duty on finished goods
lying in the factory as at the year-end is considered as cost for
valuation of stocks.
(h) Revenues and Other Income
i) Revenue is being recognised on accrual basis.
ii) All expenses, claims, interest on overdue debts/demands and other
incomes to the extent ascertainable and considered payable or
receivable as the case may be, have been accounted for.
iii) Sales are recognised on passing of the property in the goods as
per the terms of the sales, irrespective of actual delivery. Sales
include excise duty and incidental charges but rebates, discounts and
Sales Tax/Value Add Tax (VAT) are excluded there from.
(i) Foreign currency transactions
Transactions in foreign currencies are accounted for at the exchange
rate prevailing on the date of the transaction. Foreign currency
monetary assets and liabilities at the year end are translated using
closing exchange rates. The loss or gain thereon and also on the
exchange differences on settlement of foreign currency transactions
during the year are recognised as income or expenses and are adjusted
to the statement of profit and loss.
Exchange differences arising with respect to forward contracts other
than those entered into, to hedge foreign currency risk on unexecuted
firm commitments or of highly probable forecast transactions are
recognized in the year in which they arise and the difference between
the forwards rate and exchange rate at the date of transaction is
recognized as income/expense over the life of the contract.
Keeping in view the announcement of Institute of Chartered Accountants
of India dated March 29, 2008 regarding accounting for derivatives,
mark to market losses on all other derivatives contracts (other than
forward contracts dealt as above) outstanding as at the year end , are
recognized in the accounts
(j) Employee benefits
Employee benefits are accrued in the year services are rendered by the
employees. Contribution to defined contribution schemes such as
Provident Fund etc. are recognized as and when incurred. Long term
employee benefits under defined benefit scheme such as contribution to
gratuity, leave etc. are determined at close of the year at present
value of the amount payable using actuarial valuation techniques.
Actuarial gains and losses are recognised in the year when they arise.
(k) Income taxes
Provision for tax is made for both current and deferred taxes. Current
tax is provided on the taxable income using the applicable tax rates
and tax laws. Deferred tax assets and liabilities arising on account of
timing differences, which are capable of reversal in subsequent years
are recognised using tax rates and tax laws, which have been enacted or
substantively enacted. Deferred tax assets other than in respect of
carried forward losses or unabsorbed depreciation are recognised only
to the extent that there is a reasonable certainty that sufficient
future taxable income will be available against which such deferred tax
assets will be realized. In case of carry forward of unabsorbed
depreciation and tax losses, deferred tax assets are recognized only if
there is "virtual certainty" that such deferred tax assets can be
realized against future taxable profits.
(l) Provision, Contingent Liabilities and Contingent Assets
Provisions involving substantial degree of estimation in measurement
are recognised when there is a present obligation as a result of past
events and it is probable that there will be an outflow of resources.
Contingent liabilities are disclosed by way of notes to accounts.
Contingent assets are neither recognised nor disclosed in the financial
statements.
(m) Borrowing Cost
Borrowing costs, that are attributable to the acquisition or
construction of qualifying asset, are capitalised as part of the cost
of such assets. A qualifying asset is one that necessarily takes
substantial period of time to get ready for use.All other borrowing
costs are charged to revenue.
Mar 31, 2013
(a) Basis of preparation of Financial Statements
The accounts have been prepared under the historical cost convention
and in accordance with the provisions of the Companies Act,1956 and
Accounting Standards notified vide Companies (Accounting Standards)
Rules,2006. Accounting policies unless specifically stated to be
otherwise, are consistent and in consonance with generally accepted
accounting principles.
(b) Use of Estimates
The preparation of financial statements require the management to make
estimates and assumption that effect the reported amount of assets and
liabilities and disclosures relating to contingent liabilities and
assets as at the balance sheet date and the reported amounts of income
and expenses during the year. Difference between the actual results and
the estimates are recognised in the year in which the results become
known/materialise.
(c) Fixed Assets
(i) Fixed assets are stated at cost of acquisition/construction. Cost
includes borrowing cost and pre-operative expenses as allocated to the
fixed assets.
(ii) Capital Work-in-progress includes Machinery to be installed,
Construction and Erection Materials, Advances etc.
(d) Depreciation
(i) Depreciation has been provided for as per Schedule XIV of the
Companies Act, 1956, on written down value method and in respect of
plant and Machinery acquired on or after 1.4.76, on straight-line
method. Certain plants have been considered as continuous process
plants on technical evaluation.
(ii) Machinery Spares which can be used only in connection with an item
of fixed asset and whose use is expected to be irregular are amortised
over the useful life of the respective fixed assets and the amount
amortised is included under stores and spares consumed.
(e) Impairment of Fixed Assets
Fixed Assets are reviewed at each balance sheet date for impairment. In
case events and circumstances indicate any impairment, recoverable
amount of fixed assets is determined. An impairment loss is recognised,
whenever the carrying amounts of assets exceeds recoverable amount. The
recoverable amount is the greater of assets net selling price or its
value in use. In assessing the value in use, the estimated future cash
flows from the use of assets are discounted to their present value at
appropriate rate. An impairment loss is reversed if there has been
change in the recoverable amount and such loss either no longer exists
or has decreased. Impairment loss/reversal thereof is adjusted to the
carrying value of the respective assets.
(f) Investments
Long-term investments are stated at cost less provisions, if any, for
diminution in the values thereof, other than temporary.
(g) Inventories
(i) Inventories are valued at cost or estimated net realisable value
whichever is lower. The value of inventories other than raw materials
is determined on weighted average basis. The value of raw materials is
determined by first in first out method. Cost of raw materials includes
expenses incurred for procuring the same. Cost in respect of finished
goods, stock in process and wrapper represents manufacturing cost and
does not include interest, selling and distribution and certain
administrative overheads.
ii) Customs duty on materials in bond and excise duty on finished goods
lying in the factory as at the year-end is considered as cost for
valuation of stocks.
(h) Revenues and Other Income
(i) Revenue is being recognised on accrual basis.
(ii) All expenses, claims, interest on overdue debts/demands and other
incomes to the extent ascertainable and considered payable or
receivable as the case may be, have been accounted for.
(iii) Sales are recognised on passing of the property in the goods as
per the terms of the sales, irrespective of actual delivery. Sales
include excise duty and incidental charges but rebates, discounts and
Sales Tax/Value Add Tax (VAT) are excluded therefrom.
(i) Foreign currency transactions
Transactions in foreign currencies are accounted for at the exchange
rate prevailing on the date of the transaction. Foreign currency
monetary assets and liabilities at the year end are translated using
closing exchange rates. The loss or gain thereon and also on the
exchange differences on settlement of foreign currency transactions
during the year are recognised as income or expenses and are adjusted
to the profit and loss account under respective heads of accounts.
Exchange differences arising with respect to forward contracts other
than those entered into, to hedge foreign currency risk on un-executed
firm commitments or of highly probable forecast transactions are
recognized in the year in which they arise and the difference between
the forwards rate and exchange rate at the date of transaction is
recognized as income/ expense over the life of the contract.
Keeping in view the announcement of Institute of Chartered Accountants
of India dated March 29,2008 regarding accounting for derivatives, mark
to market losses on all other derivatives contracts (other than forward
contracts dealt as above) outstanding as at the year end, are
recognized in the accounts.
(j) Employee benefits
Employee benefits are accrued in the year services are rendered by the
employees. Contribution to defined contribution schemes such as
Provident Fund etc. are recognized as and when incurred. Long term
employee benefits under defined benefit scheme such as contribution to
gratuity, leave etc. are determined at close of the year at present
value of the amount payable using actuarial valuation techniques.
Actuarial gains and losses are recognised in the year when they arise.
(k) Income taxes
Provision for tax is made for both current and deferred taxes. Current
tax is provided on the taxable income using the applicable tax rates
and tax laws. Deferred tax assets and liabilities arising on account of
timing differences, which are capable of reversal in subsequent years
are recognised using tax rates and tax laws, which have been enacted or
substantively enacted. Deferred tax assets other than in respect of
carried forward losses or unabsorbed depreciation are recognised only
to the extent that there is a reasonable certainty that sufficient
future taxable income will be available against which such deferred tax
assets will be realized. In case of carry forward of unabsorbed
depreciation and tax losses, deferred tax assets are recognized only if
there is "virtual certainty" that such deferred tax assets can be
realized against future taxable profits.
(I) Provision, Contingent Liabilities and Contingent Assets
Provisions involving substantial degree of estimation in measurement
are recognised when there is a present obligation as a result of past
events and it is probable that there will be an outflow of resources.
Contingent liabilities are disclosed by way of notes to accounts.
Contingent assets are neither recognised nor disclosed in the financial
statements.
(m) Borrowing Cost
Borrowing costs, that are attributable to the acquisition or
construction of qualifying asset, are capitalised as part of the cost
of such assets. A qualifying asset is one that necessarily takes
substantial period of time to get ready for use. All other borrowing
costs are charged to revenue.
Mar 31, 2012
(a) Basis of preparation of Financial Statements
The accounts have been prepared under the historical cost convention
and in accordance with the provisions of the Companies Act' 1956 and
Accounting Standards notified vide Companies (Accounting Standards)
Rules' 2006. Accounting policies unless specifically stated to be
otherwise' are conistent and in consonance with generally accounting
principles.
(b) Use of Estimates
The preparation of financial statements require the management to make
estimates and assumption that affect the reported amount of assets and
liabilities and disclosures relating to contingent liabilities and
assets as at the balance sheet date and the reported amounts of income
and expenses during the year. Difference between the actual results and
the estimates are recognised in the year in which the results become
known/materialise.
(c) Fixed Assets and Depreciation
a) Fixed assets are stated at cost of acquisition/construction. Cost
includes borrowing cost and pre-operative expenses as allocated to the
fixed assets.
b) Capital Word-in-progress includes Marchinery to be installed'
Construction and Erection Materials' Advances etc.
(d) Depreciation
a) Depreciation has been provided for as per Schedule XIV of the
Companies Act' 1956' on written down value method and in respect of
plant and Marchinery acquired on or after 1.4.76' on straight-line
method. Certain plants have been considered as continuous process on
technical evaluation.
b) Marchinery Spares which can be used only in connection with an item
of fixed asset and whose use is expected to be irregular are amortised
over the useful life of the respective fixed assets and the amount
amortised is included under stores and spares consumed.
(e) Impairment of Fixed Assets
Fixed Assets are reviewed at each balance sheet date for impairment. In
case events and circumstances indicate any impairment' recoverable
amount of fixed assets is determined. An impairment loss is recognised'
whenever the carrying amounts of assets exceeds recoverable amount. The
recoverable amount is the greater of assets net selling price or its
value in use. In assessing the value in use' the estimated future cash
flows from the use of assets are discounted to their present value at
appropriate rate. An impairment loss is reversed if there has been
change in the recoverable amount and such loss either no longer exists
or has decreased. Impairment loss/reversal thereof is adjusted to the
carrying value of the respective assets.
(f) Investments
Long-term investments are stated at cost less provisions' if any' for
diminution in the values thereof' other than temporary.
(g) Inventories
i) Inventories are valued at cost or estimated net realisable value'
whichever is lower. The value of inventories other than raw materials
is determined on weighted average basis. The value of raw materials is
determined by first in first out method. Cost of raw materials includes
expenses incurred for procuring the same. Cost in respect of finished
goods' stock in process and wrapper represents manufacturing cost and
does not include interest' selling and distribution and certain
administrative overheads.
ii) Customs duty on materials in bond and excise duty on finished goods
lying in the factory as at the year-end is considered as cost for
valuation of stocks.
(h) Revenues and Other Income
i) Revenue is being recognised on accrual basis.
ii) All expenses' claims' Interest on overdue debts/demands and other
incomes to the extent ascertainable and considered payable or
receivable as the case may be' have been accounted for.
(i) Sales
Sales are recognised on passing of the property in the goods as per the
terms of the sales' irrespective of actual delivery. Sales include
excise duty and incidental charges but rebates' discounts and Sales
Tax/Value Add Tax (VAT) are excluded there from.
(j) Foreign Currency Transactions
Transactions in foreign currencies are accounted for at the exchange
rate prevailing on the date of the transaction. Foreign currency
monetary assets and liabilities at the year end are translated using
closing exchange rates. The loss or gain thereon and also on the
exchange differences on settlement of foreign currency transactions
during the year are recognised as income or expenses and are adjusted
to the profit and loss account under respective heads of accounts.
Exchange differences arising with respect to forward contracts other
than those entered into' to hedge foreign currency risk on unexecuted
firm commitments or of highly probable forecast transactions are
recognized in the year in which they arise and the difference between
the forwards rate and exchange rate at the date of transaction is
recognized as income / expense over the life of the contract.
Keeping in view the announcement of Institute of Chartered Accountants
of India dated March 29'2008 regarding accounting for derivatives' mark
to market losses on all other derivatives contracts (other than forward
contracts dealt as above) outstanding as at the year end' are
recognized in the accounts.
(k) Employee Benefits
Employee benefits are accrued in the year services are rendered by the
employees. Contribution to defined contribution schemes such as
Provident Fund etc. are recognized as and when incurred. Long term
employee benefits under defined benefit scheme such as contribution to
gratuity' leave etc.are determined at close of the year at present
value of the amount payable using actuarial valuation techniques.
Actual gains and losses are recognised in the year when they arise.
(I) Income Taxes
Provision for tax is made for both current and deferred taxes. Current
tax is provided on the taxable income using the applicable tax rates
and tax laws. Deferred tax assets and liabilities arising on account of
timing differences' which are capable of reversal in subsequent years
are recognised using tax rates and tax laws' which have been enacted or
substantively enacted. Deferred tax assets other than in respect of
carried forward losses or unabsorbed depreciation are recognised only
to the extent that there is a reasonable certainty that sufficient
future taxable income will be available against which such deferred tax
assets will be realized. In case of carry forward of unabsorbed
depreciation and tax losses' deferred tax assets are recognized only if
there is "virtual certainty" that such deferred tax assets can be
realized against future taxable profits.
(m) Provision' Contingent Liabilities and Contingent Assets
Provisions involving substantial degree of estimation in measurement
are recognised when there is a present obligation as a result of past
events and it is probable that there will be an outflow of resources.
Contingent liabilities are disclosed by way of notes to accounts.
Contingent assets are neither recognised nor disclosed in the financial
statements.
(n) Borrowing Cost
Borrowing costs' that are attributable to the acquistion or
construction of qualifying asset' are capitalised as part of the cost
of such assets. A qualifying asset is one that necessarily takes
substantial period of time to get ready for use. All other borrowing
costs are charged to revenue.
Mar 31, 2011
I) Basis of Preparation of of Financial Statements
The accounts have heen prepared under the historical cost convenlion
and in accordance with the provision of the Companies Art. P)56aud
accounting standards notified vide Companies (Accounting Standards)
Rules, 2006. Accounting policies unless specifically stated to be
otherwise, are consistent and are in consonance with generally accepted
accounting principles.
ii) Use of Estimates
The preparation of financial Statements require managemenl lo make
estimates and assumptions thai affect the reported amount of assets and
liabilities and disclosures relating to coiitingent liabilities as at
the fJalance Sheet date and the reported amounts uf income and expenses
during the year. Contingencies are recorded when it is probable that a
liability will be incurred and the amounts can reasonably be estimated.
Difference between the actual result and the estimates are recognised
in the year in which the results become known/ materialise.
iii) Fixed Assets
a) Fixed assets are stated at cost acquisition/construction.Cost
includes borrowing cost and pre-operative expenses as allocated to the
fixed asssets.
b) Capital Work -in-progress includes Machinery to be installed,
Construction and Erection Materials, Advances etc,
iv) Investments
Long term investments are stated at cost less provisions, if any, for
diminution in the values thereof, other than temporary.
V) Inventories
a) Inventories are valued at cost or estimated net realisable value
whichever is lower. The value of inventories other than raw materials
is determined on weighted average basis. The value of raw material is
determined by first in first out method. Cost of raw materials includes
expenses incurred for procuring the same. Cost in respect of finished
goods, stock in process and wrapper represents manufacturing cost and
does not include interest, selling and distribution and certain
administrative overheads.
b) Customs duty no materials in bond and excise duty on finished goods
lying in the factory as at the year- end is considered as cost for
valuation of slocks.
vi) Impairment
Fixed Assets are reviewed at each balance sheet date for impairment, in
ease event a and circumstances indicate any impairment, recoverable
amount of fixed assets is determined. An impairment loss is recognised,
whenever the earning amounts of assets exceeds recoverable amount. The
recoverable amount is the greater of assets net selling price or its
value in use. In assessing the value in use. the estimated Future cash
flows from the use of assets are discounted to their present value at
appropriate rate. An impairment loss is reversed if there has been
change in the recoverable amount and such loss either no longer exists
or has decreased.Impairment loss/reversal thereof is adjusted to the
carrying value of the respective assets.
vii) Foreign Exchange Transactions and Derivates
Transaction in foreign currencies are accounted for at the exchange
rate prevailing on the date of ihe transaction. Foreign currency
monetary assets and liabilities at the year end are translated using
closing exchange rates. The loss or gain thereon and also on the
exchange differences on settlement of foreign currencyt transactions
during the year are recognised as income or expenses and are adjusted
to the profit and loss account under respective heads of accounts.
Exchange differences arising with respect to forward contracts other
than those entered into, to hedge foreign currency risk on unexecuted
firm commitments or of highly probable forecast transactions are
recognized in the year in which they arise and ihe difference between
the forwards rate and exchange rate at the date of transaction is
recognised as income / expense over ihe life of the contract.
Keeping in view the announcement of Institute of Chartered Accountants
of India dated March 29,2008 regarding accounting for derivatives, mark
to market losses on all other derivatives contracts (other than forward
contracts dealt as above) outstanding as at the year end, are recognized
in the accounts,
viii) Revenue Recognition
a) Revenue is being recognised on accrual basis.
b) All expenses, claims, interest on overdue debts/demands and other
incomes to the extent ascertainable and considered payable or receivable
as the ease may be, have been accounted for,
ix) Sales
Sales are recognised on passing of the property in the goods as per the
terms of the sales, irrespective of actual delivery. Sales include
excise duty and incidental charges but rebates, discounts and Sales
Tax/Value Add Tax(VAT) are excluded there from.
x) Employee Benefits
Employee benefits are accrued in the year services are rendered by the
employees. Contribution to defined contribution schemes such as
Provident fund etc. are recognized as and when incurred. long term
employee benefits under defined benefit scheme such as contribution to
gratuity, leave etc. are determined at clause of the year at present
value of the amount payable using net actuarial valuation techniques.
Actuarial gains and losses are recognised in the year when they arise,
xi) Borrowing Costs
Borrowing costs that are attributable to the acquisition/construction
of fixed assets are capitalised as part of the assets, Other borrowing
costs are recognised as expenses in the year in which they are
incurred.
Xii) Depreciation
a) Depreciation has been provided for as per Schedule XIV of the
Companies Act, 1956. on written down value method and in respect of
plant and machinery acquired on or after 1.4.76, on straight-line
method. Certain plants have been considered as continuous process
plants on technical evaluation,
b) Machinery Spares which can be used only in connect ion with an item
of fixed asset and whose use is expected to he irregular are amortised
over the useful life of the respective fixed assets and the amount
amortised is included under stores and spares consumed.
xiii) Taxation
Provision for tax is made for both current and deferred taxes. Current
tax is provided on the taxable ineome using the applicable tax rates
and tax laws. Deferred lax assets and liabilities arising on account of
timing differences, which are capable of reversal in subsequent years
are recognised using tax rates and tax laws, which have been enacted or
substantively enacted. Deferred tax assets other than in respect of
carried forward losses or unabsorbed depreciation are recognised only
to the extent that there is a reasonable certainty that sufficient
future taxable income will be available against which such deferred tax
assets will be realized. In case- of carry forward of unabsorbed
depreciation and tax losses, deferred tax assets are recognised only if
there is "virtual certainly" that such deferred tax assets can be
realized against future taxable profits.
xiv) Provision,Contingent Liabilities and Contingent Assets
Provisions involving substantial degree of estimation in measurement
are recognised when there is a present obligation as a result of past
events and it is probable that there will be an outflow of resources.
Contingent Assets are neither recognized nor disclosed in the
financial statements.
Mar 31, 2010
I) Basis of Preparation of Financial Statements
The accounts have been prepared under the historical cost convention
and in accordance with the provision of the Companies Act, 1956 and
accounting standards notified vide Companies (Accounting Standards)
Rules, 2006. Accounting policies unless specifically stated to be
otherwise, are consistent and are in consonance with generally accepted
accounting principles.
ii) Use of Estimates
The preparation of financial statements require management to make
estimates and assumptions that affect the reported amount of assets and
liabilities and disclosures relating to contingent liabilities as at
the Balance Sheet date and the reported amounts of income and expenses
during the period. Contingencies are recorded when it is probable that
a liability will be incurred and the amounts can reasonably be
estimated. Difference between the actual results and the estimates are
recognised in the period in which the results become known/
materialise.
iii) Fixed Assets
a) Fixed assets are stated at cost of acquisition/construction. Cost
includes borrowing cost and pre-operative expenses as allocated to the
fixed assets.
b) Capital Work-in-progress includes Machinery to be installed,
Construction and Erection Materials, Advances etc. iv) Investments
Long-term investments are stated at cost less provisions, if any, for
diminution in the values thereof, other than temporary. v) Inventories
a) Inventories are valued at cost or estimated net realisable value
whichever is lower. The value of inventories other than raw materials
is determined on weighted average basis. The value of raw materials is
determined by first in first out method. Cost of raw materials includes
expenses incurred for procuring the same. Cost in respect of finished
goods, stock in process and wrapper represents manufacturing cost and
does not include interest, selling and distribution and certain
administrative overheads.
b) Customs duty on materials in bond and excise duty on finished goods
lying in the factory as at the period-end is considered as cost for
valuation of stocks.
vi) Impairment
Fixed Assets are reviewed at each balance sheet date for impairment. In
case events and circumstances indicate any impairment, recoverable
amount of fixed assets is determined. An impairment loss is recognised,
whenever the carrying amounts of assets exceeds recoverable amount.
The recoverable amount is the greater of assets net selling price or
its value in use. In assessing the value in use, the estimated future
cash flows from the use of assets are discounted to their present value
at appropriate rate. An impairment loss is reversed if there has been
change in the recoverable amount and such loss either no longer exists
or has decreased. Impairment loss/reversal thereof is adjusted to the
carrying value of the respective assets.
vii) Foreign Exchange Transactions and Derivatives
Transactions in foreign currencies are accounted for at the exchange
rate prevailing on the date of the transaction. Foreign currency
monetary
assets and liabilities at the period end are translated using closing
exchange rates. The loss or gain thereon and also on the exchange
differences on settlement of foreign currency transactions during the
period are recognised as income or expenses and are adjusted to the
profit and loss account under respective heads of accounts.
Exchange differences arising with respect to forward contracts other
than those entered into, to hedge foreign currency risk on unexecuted
firm commitments or of highly probable forecast transactions are
recognized in the period in which they arise and the difference between
the forwards rate and exchange rate at the date of transaction is
recognized as income/expense over the life of the contract.
Keeping in view the announcement of Institute of Chartered Accountants
of India dated March 29, 2008 regarding accounting for derivatives,
mark to market losses on all other derivatives contracts (other than
forward contracts dealt as above) outstanding as at the year end, are
recognized in the accounts.
viii) Revenue Recognition
a) Revenue is being recognised on accrual basis.
b) All expenses, claims, interest on overdue debts/demands and other
incomes to the extent ascertainable and considered payable or
receivable as the case may be, have been accounted for.
ix) Sales
Sales are recognised on passing of the property in the goods as per the
terms of the sales, irrespective of actual delivery. Sales include
excise duty and incidental charges but rebates, discounts and Sales
Tax/ Value Add Tax (VAT) are excluded therefrom.
x) Employee Benefits
Employee benefits are accrued in the year services are rendered by the
employees. Contribution to defined contribution schemes such as
Provident Fund etc. are recognized as and when incurred. Long term
employee benefits under defined benefit scheme such as contribution to
gratuity, leave etc. are determined at close of the year at present
value of the amount payable using actuarial valuation techniques.
Actuarial gains and losses are recognised in the year when they arise.
xi) Borrowing Costs
Borrowing costs that are attributable to the acquisition/construction
of fixed assets are capitalised as part of the assets. Other borrowing
costs are recognised as expenses in the period in which they are
incurred.
xii) Depreciation
a) Depreciation has been provided for as per Schedule XIV of the
Companies Act, 1956, on written down value method and in respect of
plant and machinery acquired on or after 01.04.76, on straight-line
method. Certain plants have been considered as continuous process
plants on technical evaluation.
b) Machinery Spares which can be used only in connection with an item
of fixed asset and whose use is expected to be irregular are amortised
over the useful life of the respective fixed assets and the amount
amortised is included under stores and spares consumed.
xiii) Taxation
Provision for tax is made for both current and deferred taxes. Current
tax is provided on the taxable income using the applicable tax rates
and tax laws. Deferred tax assets and liabilities arising on account of
timing differences, which are capable of reversal in subsequent periods
are recognised using tax rates and tax laws, which have been enacted or
substantively enacted. Deferred tax assets other than in respect of
carried forward losses or unabsorbed depreciation are recognised only
to the extent that there is a reasonable certainty that sufficient
future taxable income will be available against which such deferred tax
assets will be realized. In case of carry forward of unabsorbed
depreciation and tax losses, deferred tax assets are recognized only if
there is "virtual certainty" that such deferred tax assets can be
realized against future taxable profits.
xiv) Provision, Contingent Liabilities and Contingent Assets
Provisions involving substantial degree of estimation in measurement
are recognised when there is a present obligation as a result of past
events and it is probable that there will be an outflow of resources.
Contingent Assets are neither recognized nor disclosed in the financial
statements.